Bloomberg News

Rostelecom Preferred Shares Jump on Conversion: Moscow Mover

September 04, 2012

Preferred shares of OAO Rostelecom, Russia’s dominant long-distance phone operator, surged to the highest level in more than three months as the board plans to discuss converting them into common stock.

Rostelecom preferred shares gained 3.1 percent to 88.95 rubles by 4:08 p.m. in Moscow, the highest intraday level since May 24. The stock jumped as much as 4.1 percent earlier. The ordinary shares were little changed at 125.37 rubles.

The board will hold preliminary talks and review a presentation by Renaissance Capital about the possible conversion on Sept. 6, Kira Kiryukhina, a Rostelecom spokeswoman, said by phone today.

“We believe the preferred shares offer the best exposure to Rostelecom’s strong fundamental prospects as they are traded at a 31 percent discount to commons,” Uralsib Capital analysts led by Konstantin Chernyshev said in an e-mailed note. The bank reiterated its buy recommendation on preferred and common shares today.

Rostelecom’s preferred shares trade at 6.4 times estimated earnings, compared with 9.1 times for its ordinary shares. The preferred stock has lost about 6.6 percent this year.

Second-quarter profit rose 3 percent from a year earlier to 8.8 billion rubles, according to Rostelecom’s Aug. 30 report, exceeding analyst estimates.

To contact the reporters on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net; Ekaterina Shatalova in Moscow at eshatalova@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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